PIERRON, J.: American Warrior, Inc. (AWI) appeals the Board of Tax
Appeals' (BOTA) denial of its application for exemption from ad valorem taxation.

Under authority of Article 11, § 13 of the Kansas Constitution, AWI
submitted
an application for ad valorem tax exemption to BOTA and requested a hearing.

BOTA received the application on June 24, 1999, and scheduled the hearing for
August 24, 1999.

On August 16, 1999, AWI notified BOTA that the application was for
preapproval of the tax exemption and requested the scheduled hearing be cancelled. AWI
requested BOTA "to determine its approval of our request based on the merits of the project
and the support of the county."

On August 20, 1999, BOTA refused to act on the application until the project
was complete. BOTA indicated it would cancel the hearing and hold the application until the
new business commenced operations.

After making several requests for the status of the project, BOTA rescheduled
the hearing for July 19, 2000. On July 14, 2000, AWI requested the rescheduled hearing be
postponed again due to further delays in the project. On July 17, 2000, BOTA's counsel
indicated BOTA would postpone the hearing until AWI commenced operations and requested
additional status reports. On March 17, 2001, AWI informed BOTA the project was
operational.

BOTA received the completed packet on March 20, 2001. It published its order
on April 11, 2001, without a hearing. Citing the definition of "manufacturer" found in
K.S.A. 79-201m, BOTA found AWI did not qualify for the constitutional ad valorem tax
exemption.

Specifically, BOTA found:

"[T]he applicant's use of the property is not an exempt use because the collection and sale of
natural gas and its by-products is not manufacturing. The applicant does not transform, refine
or combine the gas with any other material to convert it to another form. The Board concludes
that, because the collection and sale of natural gas and its by-products cannot be classified as
manufacturing, research and development, or storage of goods or commodities, the Board finds
that the applicant has failed to comply with the requirements of the Kansas Constitution."

On April 24, 2001, AWI sought reconsideration of BOTA's decision and again
asked for a hearing. AWI explained the Ness County plant converted substandard natural gas
into at least two other products:

"Through the processes involved in the Ness Gas Plant operation, which include compression
and cooling to below 250 degrees below 0, the gas is transformed and refined into the two
marketable products, helium and compressed industrial gas. These products are delivered to
tank trucks and pipeline for sale at the plant outlet."

In a memorandum order certified May 1, 2001, BOTA acknowledged AWI's
timely request and denied reconsideration without hearing, because "no new or additional
evidence is offered that would persuade [BOTA] the original order should be modified or that
reconsideration should be granted."

AWI made timely petition for judicial review May 29, 2001.

Judicial review of a state administrative agency is authorized under the Kansas
Act for Judicial Review (KJRA), K.S.A. 77-601 et seq. The taxpayer has the burden
of
showing the action taken by BOTA was erroneous. K.S.A. 77-621(a). In re Appeal of
Water
Dist. No. 1 of Johnson County, 26 Kan. App. 2d 371, 372, 988 P.2d 267, rev.
denied 268
Kan. 846 (1999).

In April 1986, the legislature passed the legislation for what was to become
Article 11, § 13 of the Kansas Constitution. This legislation allowed localities to exempt
certain properties within their jurisdiction from ad valorem taxation for 10 years. Prior to this
amendment, only the legislature had authority to authorize these exemptions. The original
amendment made no explicit provision for review of these exemptions by BOTA. L. 1986,
ch. 423, § 1. As early as January 13, 1987, the Kansas Attorney General claimed BOTA
had
authority to review the exemptions approved under this section of the constitution. (See Att'y
Gen. Op. No. 87-5.)

In 1990, the legislature clarified its intent and made this exemption process
explicitly subject to the review of BOTA. Pursuant to K.S.A. 79-213(m), the applicant had to
receive BOTA's approval to obtain the ad valorem exemption. L. 1990, ch. 345, § 4.

"After examination of the request for exemption, and the county appraiser's recommendation
related
thereto, the board may fix a time and place for hearing, and shall notify the applicant and the
county
appraiser of the time and place so fixed. A request for exemption pursuant to: (1) Section
13 of article
11 of the Kansas constitution;. . . shall be deemed approved unless scheduled for hearing within
30 days
after the date of receipt of all required information and data relating to the request for exemption,
and
such hearing shall be conducted within 90 days after such date. Such time periods shall be
determined
without regard to any extension or continuance allowed to either party to such request. In
any case
where a party to such request for exemption requests a hearing thereon, the same shall be granted.
Hearings shall be conducted in accordance with the provisions of the Kansas administrative
procedure
act." (Emphasis added.)

The emphasized text was added by the legislature in 1998. L. 1998, ch. 146, §
5.

In this case, AWI contends BOTA violated due process by issuing its order
without a hearing. Since AWI requested a hearing, BOTA was required to schedule a hearing
within 30 days of receipt of the complete application. By not scheduling the hearing within 30
days of March 20, 2001, AWI contends that BOTA allowed the application to be approved by
operation of law.

BOTA may decide appeals without a hearing if the parties agree to submit the
action to BOTA based on the record, or where there are no material facts at issue and the
decision is based only on questions of law. In re Tax Appeal of Colorado Interstate Gas
Co.,
258 Kan. 310, 318, 903 P.2d 154 (1995).

BOTA can take the position that it accepted all the facts that AWI submitted in
support of its application. Therefore, no hearing was necessary. Its function was only to
interpret law as applied to the given facts.

BOTA can also claim that AWI waived the hearing. AWI requested a hearing
in its application, but in August 1999, AWI's controller asked BOTA to cancel the public
hearing and asked BOTA to decide the application "on the merits of the project and the support
of the county."

This statement could be seen as a waiver, but BOTA did not interpret it as one.
On June 9, 2000, BOTA rescheduled the hearing after the "waiver."

Material issues of fact also seemed to exist after March 20, 2001. AWI had not
explained the process used to extract helium and nitrogen from the waste gas input. It appears
BOTA made its decision on facts not given in the record presented to it. In its initial order,
BOTA stated AWI's project involved only "collection and sale of natural gas and its
byproducts." This is not what AWI claimed to be doing in its Ness County plant, and AWI's
claims are unchallenged.

As BOTA did not schedule a hearing in this case within 30 days of the
completion of the application, the application might be deemed approved by operation of
K.S.A. 79- 213(g). However, the record is quite confusing as AWI requested cancellation of
the hearing, and there was some difficulty in determining if there was a complete record.

We believe BOTA made its decision on the record now before us, and we may,
as a matter of law, determine if property is exempt from ad valorem taxation. Board of
Johnson County Comm'rs v. St. Joseph Hosp., 241 Kan. 613, 614, 738 P.2d 454 (1987).
We
will, therefore, review the substantial issues involved.

Tax statutes are construed strictly in favor of imposing the tax and against
allowing the exemption for one who does not clearly qualify. The burden of proof is on the
person asserting the exemption to bring himself or herself within the exemption statute. In
re
Tax Appeal of Collingwood Grain, Inc., 257 Kan. 237, 246, 891 P.2d 422 (1995).

AWI contends that BOTA erred by (1) challenging the county commissioners'
findings; if BOTA did have the authority to review the county commissioners' factual findings,
it erred by (2) not classifying its Ness County project as "manufacturing" or "refining" for
purposes of Article 11, § 13 of the Kansas Constitution.

At the time the legislature added Article 11, § 13 to the Kansas Constitution,
BOTA did not explicitly have the power to review these exemptions. The legislature added
K.S.A. 79-213(m) in 1990. This subsection mandates BOTA review of these applications and
allows hearings.

Under K.S.A. 74-2438, BOTA takes other tax appeals de novo. Even before
the inclusion of 79-213(m), the executive branch believed BOTA had authority to examine the
"legal and factual basis of any such exemption and to determine its merits." Att'y Gen. Op.
No. 87-5. In the scheme of the statutes, there is evidence of legislative intent to allow BOTA
to review and find facts. In the nature of things, BOTA's review is necessary as a curb on
potential excesses. Thus, the statute was apparently designed to permit BOTA to review the
determinations of county commissions. AWI's argument in this respect fails.

We must then determine whether BOTA correctly interpreted the statutes.
Manufacturing is defined by Kansas statute and refined by case law.

K.S.A. 79-201m(a)(2) defines "manufacturer" as any person, company, or
corporation who is "engaged in the business of transforming, refining or combining materials
and labor to convert tangible personal property from one form to another including
packaging."

In Appeal of Water Dist. No. 1 of Johnson County, 26 Kan. App. 2d at 377,
this court held that the initial pressurization of river water, until it reached pumping stations, is
a manufacturing process. The pressurization of the water changed its character and quality and
thus transformed the water.

Earlier, the Kansas Supreme Court had found that a grain elevator operator who
blended, cleaned, dried, and aerated grain produced a different product than it received. By
enhancing a product's value, the taxpayer was involved in "production, manufacture,
processing, . . . refining or compounding" and gained a tax exemption. In re Tax Appeal of
Collingwood Grain, Inc., 257 Kan. at 251-52.

It is not disputed that AWI's Ness County plant pressurizes unmarketable
natural gas. The result of the process is the splitting of unmarketable natural gas into
marketable helium, nitrogen, and marketable natural gas. This appears to fit squarely within
the statutory and common-law definition of manufacturing used in Kansas.

K.S.A. 2001 Supp. 74-2433 binds BOTA to the prior judicial decisions of the
Court of Appeals and the Kansas Supreme Court. Therefore, we conclude, as a matter of law,
that the process here qualifies as manufacturing as defined in our statute, and BOTA's finding
to the contrary was in error.